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Nonprofit status for CHCA long overdue

The board of the Chestnut Hill Community Association took the first steps down the path to significant change last week, agreeing via board motion to pursue changing the more than 60-year-old civic organization into a genuine 501(c)(3) charitable nonprofit.

Some might be wondering why the CHCA isn’t a 501(c)(3) to begin with. And that’s a pretty good question.

When the organization began, it was incorporated in Delaware. And its mission then was one in which civic leaders planned to become more politically involved – the sort of involvement that is generally prohibited by a nonprofit status. A 501(c)(3) group can advocate for issues, but it cannot, for example, endorse candidates.

In recent years, it’s become apparent that the CHCA has generally conformed to the guidelines for a 501(c)(3), and a renewed look at a change in status began in the spring out of practical need. As membership has declined, the organization has had to find new sources of income. From grants to tax deductible donations, a 501(c)(3) status will make it easier.

But that doesn’t mean the transition will be easy.

Last week at the CHCA board of directors meeting, Jean Hemphill, president of the Chestnut Hill Community Fund and an expert in nonprofit law, said the transition would likely take an entire year, from research to filling out paperwork to gaining approval.

A lot of that work has already begun, but there’s still much more to do.

And there are relationships to consider.

First, there is the Chestnut Hill Community Fund, which maintains an endowment of more than $675,000 and collects and distributes an annual fund drive amount of nearly $100,000 every year. The fund will continue to serve those purposes, but any fund-raising efforts by a newly nonprofit CHCA must not compete.

And for the CHCA to maintain 501(c)(3) status, it will have to raise one third of its revenue from direct funds from donations, fund-raisers and grants, something the CHCA is getting more familiar with, but will have to do more of in the future.

Finally, the biggest change in relationship will be with the Chestnut Hill Local, which is not and cannot be a 501(c)(3). The strategy for the Local will likely be to spin it off into a limited liability corporation owned and managed by the CHCA. The CHCA can still operate the Local or appoint a board of managers for the paper. Under those scenarios, it’s possible that very little will change, A board of managers, however, could change things substantially, but all that remains to be seen.

Regardless of the risks and the change, becoming a 501(c)(3) seems like a no-brainer. In fact it’s a change that is probably at least a decade overdue. With a new set of organizational rules, the association can and should refocus on its mission and build membership in the community – a task that should be easier with a newfound identity as a genuine nonprofit. The status will help the organization get out into the community with better fund-raisers and events that can further demonstrate its ability to make a difference in the community, something that is not always apparent.

And if it can do that, it can succeed at what is most important: membership. Even though the CHCA might be able to raise revenue from new sources, it will not be able to succeed without a wider membership in the community.